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need help ASAP! unsure of how to yse formulas, please show work. Formulas: Houling Perior Retarn Value Weighted Average =W1X1+W2X2++WnXn - r erate of ietiti
need help ASAP! unsure of how to yse formulas, please show work.
Formulas: Houling Perior Retarn Value Weighted Average =W1X1+W2X2++WnXn - r erate of ietiti - nuamber d peniodi Annualized Retum on Investment = (Ending Value - Beginning Value) I Beginning Value Beta = Variance/Covariance where: Covariance = Measure of a stock's return relative to that of the market Variance= Measure of how the market moves relative to its mean Beta of Portfolio Formula 1. Add up the value (number of shares multiplied by the share price) of each stock you own and your entire portfolio. 2. Based on these values. determine how much you have of each stock as a percentage of the overall portfolio. 3. Multiply those percentage figures by the appropriate beta for each stock. For example, if Amazon makes up 25% of your portfolio and has a beta of 1.43. it has a weighted beta of 0.3575 . 4. Add up the weighted beta figures. P/E Ratio = Market Price Per Share/Earnings Per Share P/B Ratio = Market Price Per Share/Book Value Per Share p/S Ratio = Market Value Per Share/Sales Per Share PEG Ratio = (Price/EPS) / EPS Growth where: EPS= The earnings per share Dividend Yield = Annual Dividend Per Share/Current Share Price Growth Rate \% = (Ending Value/Beginning Value) 100 Problems 1. You buy a stock for $60 and sell it for $90 after five years. What are the HPR, the average percentage return, and the annualized compound rate of return? 2. You are given the following information concerning three stocks. My stocks and their ticker symbols are: - Coca-Cola (KO) - ExxonMobil (XOM) - Merck (MRK) - Tupperware (TUP) - Washington Real Estate Investment Trust (WRE) Since disclosure is important in investments, you should know that I had a position in each stock at the time of set up of this course. Part 3: Using the same companies and information from questions 5 and 6 . compute the following: a. The beta coefficient for each stock and calculate the beta for your portfolio. b. What does your portfolio's beta coefficient tell you about the tendency of the port-folio to move with the market? c. Find the beta coefficients from another source for each stock. Does the ranking from least risky to most risky for the 10 stocks differ? Are the two portfolio beta coefficients different? What does any difference in the portfolio betas imply about the accuracy of the measures of systematic risk associated with your portfolio? d. How has each stock performed since the assignment began? What is the portfolio currently worth? What is the percentage change in the portiolio? Part 4: In Part 1, you invested $10,000 in each of 10 stocks and set up a watch account at a site such as Yahoo! Finance. Some of the sites provide the ratios illustrated in this module. This assignment asks you to determine if any of the stocks you selected meet any of the following ratio requirements: c. You buy shares in a mutual fund for $89.33. The fund annually distributed $8 for eight years after which you redeemed the shares for $100. What was the annualized return on your investment? 3. Part 1: You have $100,000 to invest in 10 stocks, $10,000 in each (no mutual funds). Cash is not an option. Select an Internet source and set up a "watch account." Possible websites with in-formation on companies include the following: Bloomberg: www bloombera com CNN/Money: www cnn com/business Forbes: www forbes com Google: www.google, com/finance Marketwatch: www.marketwatch.com Morningstar: wWWi morningstaricom MSN Money: Www msn com/en us/money Reuters: www reutericom. Yahool Finance: finance.yahoo com The watch account will help you follow the stocks over time and keep track of your gains or losses. Part 2: One successful portfolio manager, Peter Lynch, has suggested that you should buy stock in companies that you know or whose products you use. Since this strategy may be as good a starting point as any to learn about investing. I have selected five stocks I know or whose products I use. You shouid select five and track your five against mine, Using the information in compute the following: a. The beta coefficient for each stock and calculate the beta for your portfolio. b. What does your portfolio's beta coefficient tell you about the tendency of the port-folio to move with the market? c. Find the beta coefficients from another source for each stock. Does the ranking from least risky to most risky for the 10 stocks differ? Are the two portfolio beta coefficients different? What does any difference in the portfolio betas imply about the accuracy of the measures of systematic risk associated with your portfolio? d. How has each stock performed since the assignment began? What is the portfolio currently worth? What is the percentage change in the portfolio? Part 4: In Part 1, you invested $10,000 in each of 10 stocks and set up a watch account at a site such as Yahool Finance. Some of the sites provide the ratios illustrated in this module. This assignment asks you to determine if any of the stocks you selected meet any of the following ratio requirements: Notes: a. (Most sources use long-term debt and not total liabilities. If you wish to tise total liabilities to compute the debt ratio, you may fird that information on the firm's balance sheet.) b. Although these ratios do not indicate whether the stock is ovef-or undervalued, they can be a good place to start. For example, if the return on assets and the retum on equity are negative you might want to ask if you desire to own a stock that is operating at a lass Step by Step Solution
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